Currently, transactional data is not utilized in preparing real-time personal financial statements or indices which may assist a customer or financial institution to understand a customer's financial position. For example, personal cash flow and net worth statements for a customer are not presently created from each customer using transactional data. Such information would be useful in assisting a financial institution gauge the current credit worthiness of the customer.
Financial institutions such as banks extend credit to customers in the form of different types of loans. The determination of whether a customer should be extended credit is currently based on a FICO centric based underwriting system. A FICO centric based underwriting system uses a FICO scoring methodology along with other attributes such as Triad Score and Bankruptcy score. FICO continues to be the dominant factor in credit decision making but other factors such as Triad Score are considered as well. A calculated score assists the financial institution in determining whether credit should be extended to a customer and if so at an appropriate interest rate.
Similarly, other credit scoring systems exist which use similar information to calculate credit scores for potential customers however, these credit scoring systems and the FICO scoring methodology may not provide an accurate representation of the credit worthiness of a customer. All of these scoring systems use a fixed scoring methodology which does not take into account current transactional data which may provide additional insight into the credit worthiness of a customer. Using the existing FICO scoring methodology may unnecessarily deny customers credit or particular financial institution products.
Additional information regarding a customer's financial position would also be useful in determining the extent of credit and/or particular products to be offered to specific customers. For instance, cash flow refers to the movement of cash over a particular time period. The calculation of cash flow may be used as one measure to gauge financial health of a customer. Good cash flow projections involve using up-to-date accurate data regarding inflows and outflows of cash over a period of time. Similarly, net worth calculations may be used to assist in determining a customer's financial health. Net worth calculations involve determining a customer's financial position by subtracting the customer's liabilities from their assets.
Therefore, a need exists for an improved method and system of determining the credit worthiness of potential customers.